Calculation Cost Categories
Material
Any material receipt transaction—that is, a purchase order receipt, PO shipper receipt, work order/cumulative order receipt—might cause the material cost to change. Also, for distribution order receipts, any transfer by site, whether DRP or not, causes a material cost change, but should have the same cost as the issue value on the issue site.
Unplanned receipts, cycle counts, physical counts, and receipt transfers between locations are all transactions that do not cause cost change; the current unit cost is applied to the goods received and material costs related to logistics accounting.
Material cost calculations formula - Average:
Sum of (Receipt Quantity * Receipt Cost) / total receipt quantity
After manufacturing, finished products and components are received into stock.
Subcontract
Instead of only materials, suppliers sometimes also provide services for completing manufacturing operations. Companies subcontract operations when there is insufficient manufacturing capacity or when operations require specialized equipment.
Subcontract items are received into WIP, not into inventory. The receipt updates the quantity completed at the designated work order operation.
The work order receipt takes the subcontract from WIP, and this causes the material cost to change. Subcontract cost calculations are similar to those for materials; they use the same three methods: WAVG or FIFO.
Burden
In periodic costing, you can calculate burden costs using either the work center burden rates or the total burden cost of the period. The system only calculates burden rates when you set Work Center Rate Calculation to Yes in Periodic Costing Control File (30.5.24).
Total consumed hours = Total actual setup hours + Total actual run hours
Total burden cost = Total labor burden + Total machine burden
Burden rate = Total burden cost / Total consumed hours
Unit burden cost = Burden rate * the item consumed hours / this period total quantity of the item
Setup Labor
The following example depicts the setup labor cost calculation. Setup time includes changing or refitting a work center or piece of equipment to produce a new item, while setup costs include scrap, calibration, downtime, and lost sales associated with preparing a resource for the next item.
Total consumed setup hours = total actual setup hours
Setup rate = total setup cost / total consumed setup hours
Unit setup labor cost = setup rate * the item consumed setup hours / this period total quantity of the item
Run Labor
The following depicts run labor cost calculations:
Total consumed run hours = total actual run hours
Run rate = total run cost / total consumed run hours
The unit run labor cost = run rate * the item consumed run hours / this period total quantity of the item
Unit Labor Cost Calculation
The following depicts unit labor cost calculations:
Unit labor cost = the unit setup labor cost + the unit run labor cost
Material and Labor Cost Calculation
The cost of raw material or components issued to work orders or repetitive orders is the lower-level cost of the product and is calculated as WAVG or FIFO.
The weighted moving average calculation considers this period and the previous period. These are the calculations for material, labor, and burden costs.
Several elements can be attached to material costs to capture such things as freight, insurance, and other logistics costs. This is not available in existing direct average costing functionality. In standard QAD EE costing, several elements can be attached to any of the cost categories; in period costing, only material costs can have multiple elements.
The material cost calculation is as follows:
(this period material cost * this period receipt quantity + last period material cost * last period item quantity balance + this period material cost adjustment) / (this period receipt quantity + last period item quantity balance)
Labor cost calculation applies to semi-finished component:
(this period labor cost * this period receipt quantity + last period labor cost * last period item quantity balance + this period labor cost adjustment) / (this period receipt quantity + last period item quantity balance)
Burden cost calculation applies to semi-finished component:
(this period burden cost * this period receipt quantity + last period burden cost * last period item quantity balance + this period burden cost adjustment) / (this period receipt quantity + last period item quantity balance)